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Compute the bond expected rate of return

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An issue of Australian Treasury bonds with par of $1,000 matures in 15 years and pays 8% coupon interest annually. The market price of the bonds is $1,085, and your required rate of return is 10% p.a.

Problem a. Compute the bond's expected rate of return (yield to maturity).

Problem b. Determine the value of the bond to you, given your required rate of return.

Problem c. Should you purchase the bond?

Reference no: EM132906772

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